SAN ANTONIO, TX and
PALO ALTO, CA, May 25, 2017 /PRNewswire/ -- Biglari
Holdings Inc. (NYSE: BH) and Pacific Specialty Insurance Company
announced today a definitive agreement for a subsidiary of Biglari
Holdings to acquire all of the outstanding shares of the parent
company of Pacific Specialty and its affiliated agency, McGraw
Insurance, Inc., from its shareholders Michael J. McGraw and John M. McGraw. Pacific Specialty has been
recognized as an industry leader in motorcycle, personal watercraft
and residential property insurance.
Biglari Holdings' subsidiary, BHIC Inc., plans to acquire
Western Service Contract Corporation (parent of Pacific Specialty)
and McGraw Insurance, Inc. for a purchase price of $299.5 million, consisting of $24 million in cash payable at the closing of the
transaction and $275.5 million of
deferred payments. $175.5 million is
payable in cash over a 10-year period, and $100 million is payable by a promissory note that
matures upon the death of Michael J.
McGraw (or in 10 years following the closing should death
occur within that time period) for the benefit of the University of Notre Dame, payable at maturity
either in securities or in cash, at the election of Biglari
Holdings. The interest during Mr. McGraw's lifetime is set at the
rate of 6% per annum.
Sardar Biglari, Chairman and CEO
of Biglari Holdings, said: "For over 40 years the McGraw family has
built an excellent insurance business with a distinguished
performance. Mike McGraw will run
the company as he has in the past, an essential part of our
purchase decision. A family managed business such as the one by the
McGraws fits well within Biglari Holdings' collection of
businesses. By becoming a constituent company of Biglari Holdings,
Pacific Specialty and its affiliated agency will benefit from the
parent company's strength and stability."
Mike McGraw, CEO of Pacific
Specialty, said: "I am excited to join Biglari Holdings' group of
companies. We are an organization committed to profitable
underwriting. Sardar Biglari has
built a company we are proud to be associated with. We now have a
permanent home for our family business, one we have developed over
the decades. I'm looking forward to running the company as CEO for
as long as possible."
The ownership change will not have an impact on day-to-day
operations; Pacific Specialty and its affiliated agency will
operate independently of Biglari Holdings' other insurance
operations. The transaction is subject to customary closing
conditions, including regulatory approvals. It is anticipated that
the transaction will be completed in the third quarter.
About Biglari Holdings Inc.
Biglari Holdings Inc. is a holding company owning subsidiaries
engaged in a number of diverse business activities, including
media, property and casualty insurance, and restaurants. All major
operating, investment, and capital allocation decisions are made by
Sardar Biglari, Founder, Chairman
and Chief Executive Officer, on behalf of Biglari Holdings and its
subsidiaries.
About Pacific Specialty Insurance Company
Based in Palo Alto and
Anaheim, California, Pacific
Specialty serves individuals and small-business owners with
specialty and general policies featuring homeowners insurance,
personal lines and powersports insurance. Pacific Specialty
operates as an admitted insurance company in all 50 states and the
District of Columbia, with an "A"
(Excellent) rating from AM Best.
This release contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are based on current expectations about
future events and are subject to risks, uncertainties, and
assumptions about the companies' businesses, economic and market
factors, and the industries in which the companies do business,
among other things. Actual results could differ materially from
those forecast in the forward-looking statements as a result of,
among other things, deteriorating underwriting experience, less
than expected investment returns, and general economic
conditions.
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SOURCE Biglari Holdings Inc.